Inter-State sale principles bar State tax where the contract itself causes goods to move across State borders.

A sale is treated as inter-State trade where the contract itself occasions movement of goods from one State to another and that movement is the proximate result of the purchase arrangement. The place of delivery, or the point at which title passes, does not by itself make the transaction intra-State or permit the delivery State to tax it by legal fiction. Article 286 and section 3(a) of the Central Sales Tax Act operate to bar State taxation of such inter-State sales. On the stated facts, purchases of bamboo from Mizoram and Tripura with delivery at the mill-gate in Assam were treated as inter-State sales and outside Assam sales tax.

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Issues: Whether the purchase of bamboos from Mizoram and Tripura, with delivery at the mill-gate in Assam, constituted an inter-State sale outside the taxing power of the State under Article 286 of the Constitution and Section 3(a) of the Central Sales Tax Act.

Analysis: The determining factors are whether there was a contract of sale providing for movement of goods from one State to another and whether such movement was the proximate result of that contract. Where goods move from one State to another pursuant to the purchase arrangement, the transaction falls within inter-State trade or commerce. The place of delivery or the point at which title passes does not by itself authorize the State where delivery is effected to treat the transaction as an intra-State sale. The constitutional prohibition on State taxation of inter-State sales is independent, and the State cannot fix the situs of such a sale by legal fiction so as to levy tax merely because delivery occurs within its territory.

Conclusion: The purchases from Mizoram and Tripura were inter-State sales and were not liable to tax under the Assam General Sales Tax Act.

Ratio Decidendi: A sale is in the course of inter-State trade if the contract itself occasions movement of goods from one State to another, and the State of delivery cannot tax such a transaction by deeming it to be an intra-State sale.

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